Economic Development and Disaster Relief Inhibited by the Jones Act

Brian Slattery /
January 08, 2013

If the Jones Act was created to mitigate disasters at sea, why has it been waived during such disasters? Such a question was posed in a recent Bloomberg article.

The answer is that, rather than supporting wartime goals or sustaining national security, the Jones Act now serves primarily as a protectionist measure for maritime industries that prevents the U.S. from using resources efficiently to support security and economic strength.

The Merchant Marine Act of 1920, more commonly known as the Jones Act, was passed to support domestic shipbuilding and shipping post–World War I. It requires that all vessels carrying goods between two U.S. points be American-built, flagged, and crewed. The initial intentions of the legislation were to preserve these industries in case the military felt it necessary to call up commercial vessels and citizen sailors during a crisis. Over the years, however, this original purpose has evaporated while the law now primarily serves as a protectionist measure for domestic maritime industries.

Hurricane Katrina struck the Gulf Coast during President George W. Bush’s second term. To ensure that all available salvage, rescue, and security assets were available during restoration efforts, Bush issued a blanket waiver on the Jones Act. Many foreign-flagged vessels were in the Gulf at the time and were able to fill in where domestic capabilities fell short in recovery efforts.

President Obama oversaw the Deepwater Horizon oil spill cleanup effort a few years later. Many foreign vessels with cleanup capabilities were in the area and local authorities called for the President to waive the Jones Act, yet the Obama Administration delayed and debated this action until the crisis was over. While the spill was eventually contained, many argue that this would have been accomplished more effectively and quickly had the Jones Act been waived. Both disasters clearly illustrate how this law inhibits disaster relief efforts rather than facilitates them.

Some have argued that the Jones Act continues to support a robust domestic maritime industry that can be called upon in wartime. However, recent military engagements prove this to be false as well. Military Sealift Command (MSC) can charter foreign-flagged vessels and has done so during such engagements as Operation Desert Storm. Since this does not constitute shipping goods between two U.S. points, this does not violate the Jones Act and the MSC can thus take advantage of these foreign vessels, which are more abundant and available than their domestically built counterparts.

The Jones Act also hinders the United States’ economic viability, particularly in the energy sector and in states that rely more on maritime shipping. Hawaii, for example, cannot obtain domestically produced natural gas, as American shipyards no longer have the capacity to build liquid natural gas tanker vessels. Since U.S. shipping vessels and crews are more expensive than foreign alternatives, citizens of Hawaii, Alaska, and Puerto Rico pay higher prices for everyday goods than residents of the continental states.

Simply put, the Jones Act no longer serves any legitimate purpose for national security and in some ways hinders best practices in this regard. In providing for the common defense, Congress should reconsider regulatory roadblocks that inhibit America’s ability to protect its citizens and interests.